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Tuesday, April 26, 2011

LNG Energy IDs Gas Shows at 2nd Polish Well

LNG Energy IDs Gas Shows at 2nd Polish Well

Tuesday, April 26, 2011
LNG Energy Ltd.

LNG Energy announced that the Lebork S-1 well, on the Slupsk concession in Poland, has been successfully drilled, cased and cemented to its total depth of 3,590 meters. During drilling, numerous gas shows were recorded over 285 meters of the Lower Silurian, Ordovician and Cambrian shales. The gas shows consisted of mainly methane gas. The strongest gas shows were in the Cambrian shale, although gas shows may have been suppressed in the other shallower intervals due to the full diameter coring operations.

The well was originally drilled to 3,517 meters and had 223 meters of full diameter core recovered. At that time a comprehensive suite of openhole logs were run by Schlumberger. Upon evaluation of the logs, the well was deepened to a final depth of 3,590 meters, whereupon a 2nd suite of logs were run over the additional interval drilled; including the recovery of 113 sidewall cores. The full diameter core and sidewall cores were taken for specialized gas shale core analysis that will fully evaluate the physical parameters of the rock and will be used to calibrate the openhole logs. These analysis will provide, among other data, information on porosity, permeability, total organic carbon, rock eval pyrolysis, thermal maturity, gas composition, micropaleontology, and critical mechanical properties for completion stimulation design.

The two primary shale target intervals were thicker in the Lebork S-1 well than in the previously drilled Wytowno S-1 well. The Ordovician shale interval in the Lebork S-1 well is approximately 91 meters thick, which is slightly thicker than the 83 meters found in the Wytowno S-1 well. The Cambrian shale also thickened to 15 meters from the 9 meters found in the Wytowno S-1 well. This provides further support for the hypothesis of an increasing thickness trend that may continue into deeper portions of the basin.

The comprehensive core analysis is expected to be completed by the third quarter. The analysis of the sidewall cores from the Wytowno S-1 well are also still pending. The suite of Schlumberger openhole logs that were run in the Lebork S-1 well will be recalibrated, using the core data, to more precisely calculate the potential pay sections. The log suite in the Lebork S-1 well currently calculates the highest gas and best properties in the Cambrian shale interval followed by the overlying Ordovician shale interval. The uncalibrated log suites of both wells currently indicate higher gas calculations in the Ordovician interval in the Lebork S-1 well than in the Wytowno #1 well, but this may change after core analysis and the logs are recalibrated. During the third quarter it is anticipated that the completion will be designed and the first intervals in each well will be fracture stimulated.

The cost of the well at rig release, with casing in the ground and including the additional deepening, side wall cores and second set of logs is approximately US $5.6 million. The current estimated cost of the Lebork S-1 well, before completion, but including all future core analysis work, is US $6.5 million. Despite these added costs and due to increased efficiencies, the drilling costs are expected to be only US $0.1 million above the original drilling budget. The rig will stay on location until the end of May at which time it will begin mobilizing to the Starogard concession to begin drilling operations in mid June. The Starogard concession's wellbore will be the 5th successive gas shale well drilled by the same drilling equipment contractor and crew. LNG Energy anticipates further drilling optimization and efficiencies that will be observed in both lower costs and days on location.

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